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GM Has High Hopes for New, Smaller Cadillac

It has been three years since General Motors (GM) hobbled out of bankruptcy with a pledge that its newest cars would be competitive with the best in the world.

Gm Building
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Gm Building

But while it has improved its products since then, GM has yet to deliver a signature new model that proves it belongs among the industry’s elite.

That is about to change, company executives say, with the introduction this month of the Cadillac ATS — a compact luxury sedan with aspirations of taking on the king of the segment, the BMW 3-series.

For GM, the ATS is a make-or-break effort to establish Cadillac as a legitimate contender in the global luxury car market. And to succeed, the sleek, lightweight ATS must put to rest Cadillac’s lingering image as a brand known for its gaudy grilles, big engines and flashy designs.

“I’m fully aware this change isn’t going to happen overnight with this car alone,” Mark Reuss, head of GM’s North American operations, said. “We have to keep doing what we did with this car over the next 10 or 20 years to prove it.”

Auto analysts view the new Cadillac as evidence of how far GM has comesince its financial collapse and $50 billion government bailout.

While GM, which is still 26 percent owned by the government, has fared well with redesigns of standard models like the Chevrolet Malibu, the company started from scratch in designing the ATS.

Hoping to lure a younger buyer, it created a new rear-wheel-drive platform and loaded the car with the latest technology and touch-screen controls.

“This is something the old GM wouldn’t even try,” said David Whiston, an analyst with the Morningstar research firm. “They need this car badly to elevate the prestige of the entire Cadillac brand.”

Mr. Reuss was among the GM executives who pressed the company to make a compact Cadillac sedan that could rival the best that BMW and Mercedes had to offer.

In the past, the company shied from competing head-on with the smaller 3-series, choosing to focus on making larger, heavier Cadillac sedans and sport utility vehicles.

But with the ATS, GM virtually copied the dimensions of the BMW model and used high-strength aluminum and other parts to make it slightly lighter than a 3-series or the Mercedes-Benz C-class.

“At the end of the day, the customer is going to buy the car based on the established segments in terms of size, price and performance,” Mr. Reuss said. “For the first time, we actually did a car that wasn’t bigger and heavier than everyone else.”

The ATS comes with three engine options, ranging from a four-cylinder offering that gets more than 30 miles per gallon in highway driving to a more powerful V-6 that can reach 130 m.p.h.

GM also toned down the look of the car, replacing the sharp creases and lavish chrome that adorn other Cadillac models with a more refined design that emphasizes the sculptured hood and body panels.

“We have learned so many lessons with this car,” said David Leone, the chief engineer on the ATS. “I’ve been with Cadillac for 30 years, and from Day 1 we said this would be different than anything we’ve done before.”

The subtler design also reflects GM’s ambitionsfor the car in markets like China and Europe, where Cadillac’s all-American heritage does not resonate with customers when it competes with the top German and Japanese luxury brands.

GM has not released sales goals for the ATS in the United States or in international markets, but Mr. Reuss said he expects it to become Cadillac’s top seller.

A hit in the compact luxury segment would go a long way toward improving Cadillac’s middle-of-the-pack position in the American market. In the first seven months of the year, Cadillac sold 76,000 vehicles in the United States, compared with 185,000 by BMW and 164,000 by Mercedes-Benz.

GM also hopes the ATS will erase the memories of the last time Cadillac tried to make a compact sedan, when it gussied up a mainstream Chevrolet in the 1980s and called it a Cimarron. The car was a noteworthy flop and emblematic of GM’s inability to connect with wealthy, discriminating consumers.

“Let’s face it, the Cimarron was a Chevy in drag and a horrible car,” said Jim Hall, managing director of the auto-consulting firm 2953 Analytics in Birmingham, Mich. “The ATS is the antithesis of the Cimarron.”

Mr. Hall, however, wondered whether even GM’s best efforts could persuade BMW lovers even to consider a Detroit-made sedan.

“They are not going to be drawing people out of BMW at first, but they have to at least be on consumers’ consideration list,” he said. “And it may take years to get that consideration.”

GM has advertised the car heavily over the summer, but the first shipments are not expected on dealer lots for another week or so. Steve Groner, a Cadillac salesman in Jacksonville, Fla., said several hundred people had inquired about the car in the last few months.

“The interest is there and people are excited about it,” Mr. Groner said. But, he added, “there is nothing like sitting and driving the actual real thing.”

GM has priced the car about $2,000 less than a comparable BMW or Mercedes, with the base ATS model costing $34,000 and the most expensive $48,000.

And even if it fails to lure potential BMW buyers to Cadillac, the ATS should be a worthy alternative to other entry-level luxury models from Toyota’s Lexus brand and Honda’s Acura division.

One consumer already considering the ATS is Doug Evanitsky, a 44-year-old computer analyst from Enola, Pa. He drives an older-model Lexus IS but has been avidly reading the rave reviews in car magazines that compare the ATS favorably with the BMW.

“That’s pretty impressive, because the 3-series has pretty much been the king of the entry-level sport sedans for years and years and years,” he said. “So if somebody can get even close to it, it’s got to be worth looking at.”